Housing prices began to fall in Switzerland

What has happened? The cost of buying a home in Switzerland has finally started to fall, according to new research from the consulting group Fahrländer Partner (FPRE). Experts have said house prices have reached their "absolute peak" in 2022, with the Swiss National Bank predicting prices could continue to fall.

Details. According to the experts, the average price of houses in Switzerland has fallen by 10% since the beginning of 2023. Real estate is now 13.4% cheaper than in mid-2022, when the organization recorded house prices to be at their highest.

The fall in prices varied greatly by region, with the most significant declines recorded in Appenzell (-17.6%), Obwalden (-17.3%) and Solothurn (-16.5%). Average costs in Zurich also decreased by more than 10%, and the smallest price adjustment was recorded in the canton of Uri (-8.4%).

The main reasons. FPRE explained that the main factor behind the price declines are higher interest rates on Swiss mortgages, which have made housing less affordable and less profitable as an asset for pension providers, funds and other companies that invest in property. The imbalance was also blamed on "fundamentals", namely the fact that buying a home is still on average 45% more expensive than renting over the long term.

The price fluctuations have also drawn the attention of the government and national institutions. In their latest economic report, the Swiss National Bank predicted that the fall in property prices “could very well continue” into the future. 

Context. FPRE noted that even with the recent fall in prices, housing is still 154% more expensive than at the beginning of the century, and Swiss cities still rank among the most expensive in the world. Experts added that while a 10% drop is dramatic, property prices have only returned to 2019 levels.

Higher interest rates on Swiss mortgages have also made it less affordable for regular people to buy. Therefore, it is unlikely that housing has become any more affordable thanks to the drop in prices.

 Source: I am Expat

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